Here are four common mistakes to avoid when investing in the stock market. All can seriously hinder your portfolio’s long-term results.

1. Focusing too heavily on cutting costs: Cutting the costs of investing has an immediate, obvious benefit: it leaves you with more money. But some cost-cutting investment techniques can wind up costing you money in the long run.

For example, some investors routinely refuse to pay the market price for stocks when they buy. They always put a bid in below the offer price, in hopes of buying at a slightly better price. However, some of your good investments are going to go up as soon as you buy, and keep going up. Other investments will go down. If you always put in a bid below the current market price when you buy, you’ll filter out all your good investments. You’ll save a few cents from time to time. But you’ll always buy all your bad investment choices, and none of your good investments.

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2. Ignoring hidden assets: We continue to have a high opinion of high-quality investments that come with hidden assets. These are assets that carry only a fraction of their true value on a good investment’s balance sheet, if they appear there at all. Buying stocks with hidden assets is a little like getting something for nothing, at least for patient investors. These good investments can gain like any stock when the market rises. But they tend to hold on to their value in a market setback. They also tend to bounce back nicely when conditions improve.

3. Putting predictions before strategy: All stock market predictions are sure to fail you from time to time, often when you’ve bet most heavily on them. That’s why we advise you to downplay predictions when looking for good investments to add to your portfolio. Instead, focus on following our strategy of investing mainly in well-established companies, spreading your money out across the five main economic sectors (Finance, Utilities, Manufacturing, Resources and Consumer) and avoiding stocks in the broker/public-relations limelight.

Our strategy has a double benefit: First, it lets you tap into the market’s gains. Second, and just as important, it limits your losses during market downturns, which always strike some sectors much more heavily than others.

4. Selling good investments out of boredom: Stock prices tend to move in short spurts, interrupted by lengthy periods when they mainly move sideways. If you focus on price and fail to stay informed about the fundamentals of your investments, there is a risk that you will begin to make changes just to see some action.

Selling stocks just because you are bored with them is not the kind of mistake that brings immediate losses. But it is sure to cut deeply into your long-term returns. That’s because the market’s top performers over a period of years, if not decades, can bore you to tears for months at a time. They may go sideways for months or years before setting off on a big rise.

If you can’t resist the temptation of selling due to boredom, our advice is to set up a separate account with money you can afford to lose. That’s the place for dabbling in penny stocks, options, short-term trading or whatever. Focus your recreational-investing urges on this account, so that boredom has no impact on decisions you make for the “serious money” that should make up the bulk of your investments.

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